This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

ABF gets to cut wages 15%

ABF Freight System and the International Brotherhood of Teamsters (IBT) have reached an agreement on an “economic relief plan” deal that will reduce wages 15% for the struggling LTL carrier. According to IBT, the pact will “protect thousands of Teamster members’ jobs and their health, welfare and pension benefits.” The announcement was made on the Teamsters website

David Cullen, executive editor | Apr 21, 2010

ABF Freight System and the International Brotherhood of Teamsters (IBT) have reached an agreement on an “economic relief plan” deal that will reduce wages 15% for the struggling LTL carrier. According to IBT, the pact will “protect thousands of Teamster members’ jobs and their health, welfare and pension benefits.” The announcement was made on the Teamsters website.

Tyson Johnson, director of the IBT’s National Freight Div., said the union took a “bold step to help ABF get through this terrible economy and that we must act now to prevent far worse problems down the road. No one wants to see wage cuts, but this agreement protects our ABF members’ jobs and their health, welfare and pension benefits.”

Johnson pointed out that the an independent financial advisor verified that ABF is losing money and has been exhausting its cash reserves, noting that the message was “we must act now” to protect jobs and benefits there.

IBT said the “Wage Reduction—Job Security Plan” calls for a reduction in gross wages and mileage rates of 15%, effective the first payroll period after ratification via the National Master Freight Agreement (NMFA), which runs until March 31, 2013. Negotiated wage increases (less 15%) and cost of living adjustments, if any, will remain in effect for the life of the plan.

The Teamsters were adamant in pointing out that the relief provided in the plan was limited to the 15% wage cut and that there “no changes to any health, welfare and pension contributions” as these plans are funded as provided for in the NMFA.

By contrast, a wage cut deal reached last summer between IBT and YRC shaved 15% off wages, but also allowed that company to terminate pension fund contributions (effective from July 1, 2009 through December 31, 2010).

The union said the ABF plan also contains “safeguards” for Teamster workers there. These are “triggers to reduce the wage reduction in 2011-2012 or terminate the plan if certain benchmarks are reached indicating a financial turnaround” for ABF. In addition, IBT will have access to the company’s financial records and the right to have an annual audit done.

The agreement must be ratified by Teamster members. IBT said ballots are scheduled to be mailed out to members on or about April 30, with ballots tentatively scheduled to be counted on May 21. About 7,000 Teamsters are actively employed at ABF while another 1,200 are on recall, noted IBT.

“We are cautiously optimistic about the potential for ratification," said Danny Loe, an ABF spokesperson, per a news article posted by ArkansasBusiness.com. "We believe that the facts supporting ABF's need for ratification of this agreement are compelling and that our employees will understand the need for ratification."

According to IBT, ABF lost $99.9 million in 2009 after a $49 million profit in 2008— an almost $150 million negative swing—and revenue was down 21% from 2008 to 2009. “ABF has been exhausting its cash reserves at an unsustainable rate and cannot face losses of this magnitude for much longer, especially in a tight credit market where alternative financing has largely dried up,” stated IBT.

IBT noted that once the deal is in effect, “the company-wide wage concessions will not pull ABF completely out of the woods” based on the union’s projections, but it will “provide immediate assistance and steer the turnaround.”